NPS Service fees revised: however, NPS still remains a low fee product.

On October, 2017, the PFRDA (Pension Fund Regulatory and Development Authority) published an update to the POP (Points of Presence) service charges for all the citizens, and corporate NPS models. And the changes came under effect from November 1st, 2017 (with the omission of e – NPS servicing fee changes which are effective November 15, 2017).

The change in service fees will definitely have an impact on the subscribers. In NPS charges varies in different stages and this happens due to the number of stakeholders in the system. And there are fixed charges as well; some are based on transactions and others are presented as a percentage of assets under management (AUM).

Let’s look at the changes which have been made in the recent announcement:

One time account opening fee has been increased to Rs. 125 and up to a maximum of Rs. 200. However, over 15 – 20 years of contribution, which means on the long run, this difference will be very small indeed.

And also the POPs will carry on compensation of Rs. 50 per year. However, this amount is only payable in case the subscriber has made a contribution in Tier I account of more than minimum of Rs. 1,000 in a fiscal year. And the subscriber is also required to have completed more than 6 months in that financial year.

Earlier, in case a subscriber had opened an e – NPS account tagged to a POP, the servicing charges for the current transaction could be 0.05 per cent, which has now been increased by 0.1% which is subject to a minimum of Rs. 10,000, which came into effect from 15th November, 2017. And rest of the POP charges will remain the same, which are opening charges, annual maintenance cost per account and per transaction.

Apart from all the changes, NPS (National Pension Scheme) remains a low free product; however the only condition is to contribute a reasonable amount for a longer period of time in order to gain the best value out of these low charges.